John Wookey has a tough job. The former Oracle Exec, currently EVP @ SAP, the Enterprise Software leader is supposed to charter SAP’s foray into On-Demand – in a company whose bread-and-butter is clearly in installed applications and which still largely considers a threat to its traditional lucrative business.

He spent the first 6 months crafting the new strategy, which he first announced at the SIIA OnDemand Europe conference in Amsterdam. As quoted by Phil Wainwright:

On demand is the next stage in the evolution of application development … It is absolutely essential from SAP’s perspective that we embrace this change.

…

On-demand is what our customers are looking to invest in. If we do our job well and listen to our customers, these are the applications we have to be delivering. We have to drive to leadership in on-demand applications.

Not surprisingly given SAP’s huge installed base the first On-Demand applications would be “add-ons” to the existing on-premise Business Suite and would be architected to take advantage of the existing policy and configuration settings of BS, thus reducing the burden of deployment. This hybrid strategy will sure appease SAP’s current customers, but will it eventually lead to complete SaaS offerings by SAP?

And even existing customers won’t necessarily wait: while SAP is still strategizing, Siemens, a key SAP customer and also strategic SAP implementation partner has just signed a global deal with SaaS talent management provider SuccessFactors to cover their 420,000 employees worldwide. A Huge SaaS win, one that may sound a few alarms in SAP’s Board room.

SAP’s SaaS Chief himself understands the company has little credibility in the On-Demand space for now:

I don’t think that anyone will be convinced until we deliver the products.

While Wookey’s mission is all about large enterprise, let’s not forget that SAP already has a a feature-wise excellent SaaS offering, Business ByDesign for the SMB market. It’s the best SaaS suite NOT available on the market today. Let’s hope SAP will be able to fix the architectural issues that prevented them from scaling BYD profitably – the solution is rumored to come late this year, with market expansion in 2010. SMB or not, that would do more to restore SAP’s SaaS-y credibility than Powerpoint slides.